CEO Mike McGaugh provided some insight into company operations during an Aug. 3 conference call with stock analysts to discuss second quarter earnings.
"We continue to face demand headwinds in certain end markets primarily in recreational vehicles, in marine tanks and in high-dollar discretionary items such as gas cans, decorative planters and home goods," he said.
"Just as in past quarters we continue to offset the impacts of these demand headwinds," he said. "We still have a long, multiyear runway of profit improvement opportunities due to our self-help initiatives to drive performance improvements at Myers."
The CEO said these "improvements are largely within our control, and we will continue to execute them though this year and beyond. One concrete example on the operational excellence side are the gains in productivity allowing us to streamline our asset footprint and take costs out of the company due to running our plants at a more optimal fashion we continue to unearth new capacity. We call it the hidden factory," McGaugh said.
"This enhanced productivity and newfound capacity has allowed us to optimize our footprint and take costs out of the company. An example of this is our recent move to consolidate two rotational molding facilities in Northern Indiana into a single facility. This move improves our efficiency and saves costs," McGaugh said.
"Across the board we are using our operational excellence focus to drive a more variable cost structure, reducing costs when demand is soft but ensuring we are well positioned to meet the demand when markets recover," the CEO said.
While talking about streamlining existing manufacturing, the company also talked about the potential for acquisitions. Myers continues to look at the market for potential deals but will not jump at just any deal.
The company spent more than $1 million during the past quarter on what the CEO called "M&A frameworks, tools and capabilities" that will help Myers acquire and integrated larger and more complicated deals in the future.
"We are focused and disciplined in our approach to acquisitions. We have a world class team, a strong balance sheet and we are ready to act decisively on the right targets. As we've said before we won't get deal fever. We won't overpay. We are and we will continue to be disciplined in our M&A approach," he said.
Myers, in the CEO's words, had a challenging second quarter that included "headwinds in certain markets."
The company earned $10.6 million, or 29 cents per diluted share, on sales of $208.5 million for the three months ended June 30. This compares with earnings of $15.8 million, or 43 cents per diluted share, on sales of $233.2 million during last year's second quarter.
"Second quarter of 2023 was challenging given the softness of some end markets. But this quarter also demonstrated the resilience in our earnings and out cash generation capabilities," McGaugh said.
Akron, Ohio-based Myers is the second-largest rotomolder in North America with annual sales of $220.8 million, according to the latest ranking by Plastics News. The company does custom molding and makes returnable packaging, storage and safety products. It also owns the largest tire repair supply distribution business in the United States.
Fitz said the wants to "maintain optionality."
"We want to have some built-in capacity that's available to us that we can quickly leverage," the CFO said, when the market picks back up.
